The real unemployment number
Forgive me if I don’t make sense today. I’m going to take a bucket of water and pour in a few drops at the top. Let’s call that job creation. What I’m going to gloss over is the gaping hole near the bottom where water is gushing out. Some skeptics might call that people leaving the labor force, but the shiny objects are those droplets of water and the trickle from last month we found was larger than we thought. So the bucket seems really full.
For the first time since 2008, the “topline” unemployment number is under 7 percent, as it was announced today that the rate dropped to 6.7 percent. But experts were “hard pressed” to explain why so few jobs were created.
The problem was summed up by someone who’s not an economist, but a frequent critic of the current regime. Nathan Mehrens of Americans for Limited Government noted:
Since Obama became president, the number of people who are considered to be in the civilian job eligible population has increased by just shy of eleven million people, but the number of people who have entered the work force has only increased by about 730 thousand people. Quite simply our nation cannot survive when fewer than sixty six out a thousand working aged people are entering the workforce. Of those sixty six who want a job, about five of them are unemployed.
I’ll grant that the Mehrens example is perhaps a little overblown, as more of those who would be considered job eligible also become eligible for Social Security and/or reached retirement age. There are also a growing number who claim disability, which is why the seasonably adjusted number for those not in the work force has peaked at 91.8 million while the labor participation rate slid back under 63 percent. They’ve talked for years about the fact that a shrinking number of workers contribute to Social Security while those who collect live longer; well, we’re now practically at a point where five workers support three who aren’t working. Nor do these raw numbers consider how many jobs are in the public sector vs. private sector work, so the ratio is just about to a point where one private-sector worker is supporting one of either the roughly 22 million public-sector workers or the nearly 92 million non-workers.
Bottom line: the system trend is unsustainable, So what is the solution being offered by the government? Barack Obama calls them “Promise Zones” and they are supposed to “cut through red tape.” But it looks to me like more of the same:
(Yesterday), in the East Room of the White House, the President will announce the first five “Promise Zones”, located in San Antonio, Philadelphia, Los Angeles, Southeastern Kentucky, and the Choctaw Nation of Oklahoma.
These areas – urban, rural, and tribal – have all committed, in partnership with local business and community leaders, to use existing resources on proven strategies, and make new investments that reward hard work. They have developed strong plans to create jobs, provide quality, affordable housing and expand educational opportunity, which we’ll help them execute with access to on-the-ground federal partners, resources, and grant preferences.
“Make new investments” is codespeak for spending more money on the problem, and Democrats just love to utter that “investment” term. That makes sense when the vast majority of the proposed solution lies in more federal involvement. (There is a small component involving tax credits, but those are generally temporary and don’t cover all of the increased costs involved in locating in these areas.)
So the one-to-one ratio will probably continue, particularly since the first five mainly involve some sort of educational component. Of course, that won’t be done through private-sector means.
Has anyone thought to ask those who create jobs what gives them an incentive to do so? Certainly tax credits may help, but as I noted above those are of a fleeting nature. Unfortunately, it seems that government regulation is forever; well, at least until business learns to live with that which is in place – only then do the bureaucrats seem to change things for the worse. One study pegged the net cost of government regulation in 2013 at $112 billion; using that as a guide business spent that sum complying with regulations instead of creating 2.24 million jobs at $50,000 apiece. That would knock nearly one-fourth off the unemployment rate, putting it back to around the 5% “normal” the media regularly lambasted as a “jobless economy” during the George W. Bush years.
It seems like politicians pay lip service to the concept of business friendliness during election years because they know the voting public really, truly wants to work and advance their economic status. (I know I do.) Yet the results of the last half-dozen years or so have been those of government projecting more of its influence over the private sector when the reins should be slackened instead. In no way has the world reached a terminal point of satisfaction with its collective lot, so there’s much room for growth in the American private sector given the advantages our nation has in terms of natural resources and willing workforce.
So let my job-producing people go, and we can return to the full employment we enjoyed just a few short years ago.